Cyber insurance

Frequently Asked Questions (FAQ)

• How do I know I have the right coverage for my business?

  When it comes to cyber insurance, there are quite a few nuances that can make it difficult to choose the right level of coverage for your business. It is important to make sure you invest in coverage with the appropriate policy limits and endorsements for your business’ risk profile.

  We have many resources to help you on your journey to buy cyber insurance. Check out the Embroker Resource Hub for articles on types of business insurance coverage, top cyber threats, guidance on insurance costs, and how to get a quote. It is important to understand what you are buying when it comes to insurance and have a grasp of what is covered and what cyber insurance doesn’t cover.

  If you’re completely new to business insurance, check out our beginner’s guide to commercial insurance.

  Does it sound like your business needs better coverage? Tell us more about your business to get your cyber insurance quote in under 10 minutes.

• Are there additional coverages available with Cyber insurance?

  Cyber insurance policies will not cover claims of harassment, wrongful termination, or other employment-related issues. For these types of claims, you should invest in Employment Practices Liability Insurance.

  Cyber liability insurance protects businesses from virtual harm and does not protect against physical property damage. If you need to insure a physical business property, you should look into a Commercial Property insurance policy.

  Cyber liability insurance shields your company from financial loss in the case of unsolicited cyber attacks. But, a standard cyber liability policy will not cover you if someone within your company makes a mistake that results in a data breach or cyber attack. This is where Technology Errors and Omissions insurance comes into play. Tech E&O policies fill this coverage gap, which ensures your business is protected from any and all cyber attacks.

• What add-on endorsements are available with cyber liability insurance?

  It’s important for businesses to evaluate their specific risks and consult with an insurance professional to determine the appropriate level of cyber coverage needed.

  Factors such as your industry, the volume of sensitive data you regularly handle, reliance on technology, and industry regulations should be taken into consideration when assessing the level of cyber coverage you need.

  Cyber liability insurance covers reputational damages, financial losses, and court fees resulting from a cyber-attack or data breach. However, as we have discussed, there are some limitations to cyber coverage. This is where added endorsements come in.

  Here are some common endorsements companies add on to their cyber liability policies:

  • Bricking: Covers the cost of replacing hardware that becomes unusable due to a cyberattack.
  • Property damage coverage: Covers any property damage that occurs as a result of a cyber attack, such as a hacked industrial control system causing equipment failure.
  • Third party coverage for vendors: Endorsements such as loss payee and additional insured extend your cyber liability coverage to contractors, vendors, and other third parties.

• What businesses benefit the most from cyber insurance?

  Cyber liability insurance is important for essentially any business that works online. We strongly encourage all our clients to consider the value of cyber insurance, especially if they handle or use digital information.

  If your business stores sensitive customer data such as names, addresses, credit card information, and Social Security numbers, then there is a regulatory obligation to keep that data secure. Cyber coverage is essential for businesses of all sizes and across various industries.

  Here are some examples of businesses that may benefit from cyber insurance:

  • Startups: These companies are at a particularly high risk of cybercrime. Startup companies handle sensitive customer data and develop innovative technologies. Despite the high risk, many startups invest less in cybersecurity and have fewer processes in place to handle incidents.
  • Tech companies: Like startups, tech companies are particularly vulnerable to cyber threats due to their digital infrastructure and may face significant financial and reputational risks if a cyber incident occurs. Cyber coverage can help mitigate these risks.
  • Financial institutions: Banks, credit unions, insurance companies, and other financial institutions handle large volumes of sensitive customer data and financial transactions. These companies face many cyber threats, such as unauthorized fund transfers, identity theft, and ransomware attacks.
  • Professional services firms: Accounting services, consulting companies, and other professional services firms often deal with confidential client information. They may be targets for cyber attacks aimed at stealing client data or intellectual property. Cyber insurance can provide coverage for legal expenses resulting from data breaches, privacy violations, or client claims.
  • Small and medium-sized enterprises (SMEs): Small businesses may mistakenly believe that they are less likely to be targeted by cyber attacks. However, SMEs are increasingly becoming targets because they often have fewer cybersecurity resources and are seen as entry points to larger networks.
  • Healthcare providers: The healthcare industry is a prime target for cyber attacks due to the abundance of valuable patient health records and sensitive personal information. Healthcare providers, including hospitals, clinics, and private practices, should consider cyber insurance to protect against the costs associated with data breaches, regulatory penalties, and potential lawsuits.
  • Law firms: Cyber insurance enables law firms to successfully negotiate the complicated aftermath of a cyber attack and reduce financial and reputational damages. It can pay for the costs of prospective lawsuits, credit monitoring services, legal fees, data breach response, forensic investigations, notification to affected parties, and legal costs. Additionally, ransomware payments, regulatory fines, and business interruption losses may all be covered by cyber insurance.

• Why do you need Cyber insurance?

  Many are surprised to learn the real costs associated with a breach. Cybercrime cost companies more than $8 trillion worldwide in 2023, a figure that is only expected to continue to rise.

  This simply highlights how important cyber insurance is as not investing in the policy could cost your business thousands (if not millions) of dollars.

  Unsurprisingly, cyber insurance emerged onto the insurance scene relatively recently to fill a gap in coverage that simply did not exist yet. The fact is, traditional business insurance policies were simply not created to cover the types of risks most commonly associated with cyber insurance.

  There is no doubt that as the threat of cybercrime expands, the cyber insurance space will also continue to grow rapidly. Also, as is the case with most other types of insurance offers, cyber insurance policies are evolving towards more industry-specific solutions and becoming less general.

• Is cyber insurance a legal requirement

  Cyber insurance is not a legal requirement in most jurisdictions. That said, even if regulatory bodies don’t explicitly require it, certain industries may effectively mandate coverage. For example, businesses handling sensitive customer data, such as healthcare providers, financial institutions, and large corporations, may be contractually obligated to invest in coverage. Additionally, many companies purchase cyber liability insurance due to the threat that major regulatory fines pose.

  Additionally, if your business’s revenue stream has any contact with European consumers or businesses, then the recently implemented General Data Protection Regulation (GDPR) likely applies to you. Many US-based businesses have already taken measures to be GDPR compliant, but that doesn’t mean your insurance has followed suit.

  The regulatory landscape for cybersecurity is constantly evolving, so it is important to stay up to date to make sure your business complies.

• What is the difference between 1st-person and 3rd-person cyber coverage?

  The main difference between first-party and third-party cyber liability coverage lies in who the policy is designed to protect.

  First-party cyber insurance is designed to protect your business and help you recover from financial losses caused by a cyber incident. 

  Third-party cyber insurance covers claims made by others against your company. This may include customers, vendors, or regulatory bodies who suffer damages due to a cybersecurity issue from your business.

• What does Cyber insurance cost?

  The cost of a cyber liability policy can vary significantly depending on several different factors. That said, most cyber insurance policies cost between $1,200 and $7,000 per year, with a median of around $2,000 annually.

  Here are some factors that affect your cyber insurance premiums:

  • Company size
  • Business Industry
  • Amount of sensitive data you collect 
  • Annual revenue
  • Claims history
  • Policy limits
  • Chosen deductuble